The Antitrust Attorney Blog
Authors: Steve Cernak, Luis Blanquez, and Kristen Harris
The largest penalty in the history of the Hart-Scott-Rodino Act did not come from a botched filing. It came from a deal the parties chose not to file for at all. On July 13, 2026, the FTC announced a $12 million settlement with Edwards Lifesciences and Genesis MedTech over Edwards’ 2024 acquisition of JC Medical. Edwards pays $10 million, Genesis pays $2 million, and Edwards accepts prior notice obligations and a five-year antitrust compliance program. The defendants admit no wrongdoing.
The rule at the center of the case, 16 C.F.R. § 801.90, is short and rarely litigated. It deserves a closer look, because the facts here show how it works and how a violation gets discovered.
The Facts
On July 22, 2024, Edwards agreed to buy JC Medical from Genesis for $115 million plus roughly $1.8 million in milestone payments. That price sat just under the HSR size of transaction threshold, which was $119.5 million at the time. Edwards closed the same day, filed no HSR notification, observed no waiting period, and did not announce the deal.
Two weeks later, on August 9, 2024, Edwards paid Genesis another $25 million for non-voting shares in Genesis itself. If one must add the $25 million to the $115 million, the combination would cross the HSR threshold.
JC Medical mattered to Edwards because it was conducting clinical trials for TAVR-AR, a promising transcatheter aortic valve replacement treatment for severe aortic regurgitation. The day after closing the JC Medical deal, Edwards signed an agreement to buy JenaValve, allegedly JC Medical’s only serious U.S. competitor in TAVR-AR trials. Edwards seemed to be trying to control both companies developing the technology.
How HSR Rule 801.90 Works
The HSR Act requires parties to a deal above the applicable threshold to notify the FTC and the Department of Justice, and then wait before closing. The waiting period gives the agencies time to review the proposed transaction for substantive antitrust concerns.
Rule 801.90 stops parties from drafting their way around that duty. Any transaction or device “entered into or employed for the purpose of avoiding” HSR gets disregarded, and the filing question is answered by looking at the substance of the deal instead of its form. The operative word is purpose. The rule does not punish a below threshold price or a contemporaneous side investment on its own. It punishes structure chosen simply to dodge the filing. A party with a real, independent business reason for the same structure has a defense that goes to the heart of the rule.
The FTC’s theory was that the $25 million investment was extra compensation for JC Medical dressed up as something else. The complaint points to the evidence the agency says proves purpose: first, an April 2024 email transmitting two term sheets that described the JC Medical purchase and the Genesis investment as a single transaction, with the investment timed to close alongside the acquisition; and, second, internal documents and testimony treating the investment as “within the deal structure.” The sharpest line came from Edwards itself, which told JenaValve there was no HSR review on the JC Medical deal because it was “below the threshold! Intentional.” Because the parties chose to settle, we do not know what their defense might have been.
Why the Agency Found Out
HSR avoidance is hard to detect precisely because there is no filing to review. So how did this surface?
Edwards tried to buy both companies in what is supposedly a two-company market. That drew an FTC challenge to the JenaValve deal, which the agency blocked in January 2026 after a six-day hearing and a preliminary injunction. The investigation into the second deal turned up documents about the first. Once staff had emails and testimony describing the JC Medical structure and its purpose, the 801.90 case wrote itself.
Put differently, a below threshold price and a side investment might never have drawn a second look on their own. What drew the look was a buyer trying to buy two rivals in a concentrated market, and a paper trail that used the word “intentional.”
Five Ways to Avoid the HSR Rule 801.90 Problem
The takeaway is not that side investments or below threshold pricing are off limits. It is that structure and documents must line up with a real business purpose. Below are five easy practical steps companies can take with their antitrust counsel to avoid getting into the same situation:
- Document the business reason for the structure while you build it. 801.90 turns on purpose. A contemporaneous, independent business rationale for a side investment or a particular price is a valid defense.
- Aggregate contemporaneous payments between the same parties. When a concurrent investment grows out of the same negotiation and closes alongside the acquisition, assume the agency will add it to the price. So, you should value the substance, not the labels on the term sheets unless there is some legitimate, independent business rationale not to do so.
- Train deal teams on what they write. “Below the threshold! Intentional” is the sentence that turns a defensible structure into a potential penalty. Every email and text is discoverable in a related investigation. Make sure you, the deal team, and the client understand the real rationale for the structure and the HSR implications.
- Treat each related deal as a spotlight on the others. If you are acquiring in a concentrated space, and especially if you are pursuing what some may consider the only other player in the market, expect the agencies to look, and expect them to look at the earlier deal too. That advice is especially relevant for any private equity firm who might be accused, even incorrectly, of trying to “roll-up” an industry.
- When the structure of the transaction or accounting of the purchase price seems to lead to a conclusion that no filing is necessary, take a second look. A 30-day waiting period is cheaper than a $10 million penalty, prior notice obligations, and a five-year compliance decree.
801.90 has teeth, but it is a purpose test, not a math test. Deals get structured for sound business reasons every day, and the trouble only starts when their main reason is to keep the agency from looking.